Governance in Enterprise Risk Management, presented by Michael Lawrence, 10th Oct 2016, APM North...

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© 2016 Rolls-Royce plc and/or its subsidiaries

The information in this document is the property of Rolls-Royce plc and/or its subsidiaries and may not be copied or communicated to a third party, or

used for any purpose other than that for which it is supplied without the express written consent of Rolls-Royce plc and/or its subsidiaries.

This information is given in good faith based upon the latest information available to Rolls-Royce plc and/or its subsidiaries, no warranty or representation

is given concerning such information, which must not be taken as establishing any contractual or other commitment binding upon Rolls-Royce plc and/or

its subsidiaries.

Governance in Enterprise Risk

Management

APM Conference

Michael Lawrence







its subsidiaries.

About Rolls-Royce

Section 1

Michael Lawrence


© 2016 Rolls-Royce plc

The information in this document is the property of Rolls-Royce plc and may not be copied or communicated to a third party, or used for any purpose other

than that for which it is supplied without the express written consent of Rolls-Royce plc.

This information is given in good faith based upon the latest information available to Rolls-Royce plc, no warranty or representation is given concerning

such information, which must not be taken as establishing any contractual or other commitment binding upon Rolls-Royce plc or any of its subsidiary or

associated companies.

We don’t make these

http://www.google.co.uk/url?sa=i&rct=j&q=&esrc=s&source=images&cd=&cad=rja&uact=8&ved=0ahUKEwjF95v4y87PAhWD1BoKHZ4TDigQjRwIBw&url=http://www.caranddriver.com/rolls-royce&psig=AFQjCNGnut2fqiwCjJ0Feara4E-tu5hUjQ&ust=1476132419902923







its subsidiaries.

Why risk management is

important

Section 2

Michael Lawrence

What was the year? 11

https://www.amazon.com/Pop-Culture-Collector-Malibu-Barbie/dp/B00005Y1CU

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http://www.google.co.uk/url?sa=i&rct=j&q=&esrc=s&source=images&cd=&cad=rja&uact=8&ved=0ahUKEwimxtqbzs7PAhUFWxQKHV5aCl8QjRwIBw&url=http://www.featurepics.com/online/Internet-Chat-Rooms-1120762.aspx&bvm=bv.135258522,d.d2s&psig=AFQjCNGcfezh9lxzo6yloaobbqrC2XLFaA&ust=1476133016193417

Do We Need to Manage Risks?

Click each tab for more information. Click the ‘next’ button to continue.

1971

Rolls-Royce Declared

Bankrupt

2010

Rolls-Royce Qantas A380

Engine Explosion

2013

Formal Bribery Investigation

at Rolls-Royce

News Source: http://www.telegraph.co.uk/

Screen 16


1971


Bankrupt

2010


Engine Explosion

2013


at Rolls-Royce


1971


Bankrupt

2010


Engine Explosion

2013


at Rolls-Royce

News Source: http://www.bbc.com/news/business-23076586/


Click each tab for more information. Click the ‘next’ button to continue.

1971


Bankrupt

2010


Engine Explosion

2013


at Rolls-Royce

News Source: http://www.telegraph.co.uk//

Screen 16

You have now seen various examples on how not managing risks properly resulted in severe losses and even closure of businesses.

We would like to think these things cannot happen at Rolls-Royce. But could they?

Risks and our share price

The impact of risks on our share price

• 17

Risks and our share price

A: £5.6bn







its subsidiaries.

Corporate governance

Section 3

Michael Lawrence

Sir Ian Davis 20

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Risk concentration 21

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Closer link between risk and business 22

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The Code: Comply or explain….

• 23

Robust assessment 24

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Appetite 25

Viability 26

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Board oversee effectiveness 27







its subsidiaries.

Our response

Section 4

Michael Lawrence

33

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34

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36

Rolls-Royce Proprietary Data

Identify Principal Risks (PR)

Impact of PRs on Long Term Viability

Set Risk Appetite for PRs

Monitor Mitigation & Controls of PRs

Governance of PRs

Reporting

Ass

ess

Eff

ect

ive

ne

ss o

f

Ris

k M

anag

em

en

t Sy

ste

m

Risk Management Process

Effectiveness is measured in two steps: 1) Where is risk management being performed? 2) Is it performed to an acceptable standard? 3) What incidents have happened?

Enterprise Risk Management Framework 37

Process1 Hierarchy Tools

Plan

Identify

Assess

Treat

Review

Close

Risk management culture

Risk organisation3 and training

Supporting technology

Risk appetite2

Templates and guides

Risk policy

Group RMP

Assurance

1) Board 2) Board committees 3) ELT risk committee 4) Business / Functions 5) Sub-Business / Major Projects

Governance & Committees

Effectiveness measures & KRIs

1 Risk process is in Rolls-Royce Management System and is integrated with Strategy, Capex, PM and MI&F 2 Appetite expressed using impact categories and Group escalation criteria 3 ERM central, Champions, Co-ordinators & Facilitators

Principal risks

Key risks

Business/Function risks

Sub-Business / Major Projects

Group risk register

Incident reporting

Deep dives







its subsidiaries.

Benefits

Section 5

Michael Lawrence

40

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41

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43

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44

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Governance in Enterprise Risk Management, presented by Michael Lawrence, 10th Oct 2016, APM North...

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Transcript of Governance in Enterprise Risk Management, presented by Michael Lawrence, 10th Oct 2016, APM North...